Fed rate hikes and the prospect of more to come in combination with a slight decline in long term bond yields have cause a renewed flattening of the US yield curve. Historically, yield curve inversions have been followed by recessions. Today’s situation is different. Growth is strong and is expected to remain so. Moreover, the federal funds rate adjusted for inflation -a measure of the tightness of monetary policy- is still very low, which is quite different from what we have seen before when the curve flattened. Finally the high yield bond spread versus US treasuries is still low, which implies ongoing easy financing conditions and also reflects that investors are relaxed about the growth outlook and credit risk. To conclude, the flattening of the curve is not a source of concern yet: but it needs to be monitored in particular if real rates were to rise and the corporate bond spread were to widen a lot.